Question 1

An invoice, with payment terms of 5/10, n/30, was issued on April 28, for $235. If the payment was made on May 12, the amount of payment will be:

Accepted Answer

A) $235.00. 
B) $211.50. 
C) $223.25. 
D) $230.00. 
A) $235.00. 
B) $211.50. 
C) $223.25. 
D) $230.00.

Question 2

A company purchased inventory for $2,000 from a vendor on account, FOB shipping point, with terms of 2/10, n/30. The company paid $100 cash for freight in. The entry to record payment of invoice within 10 days by the purchaser would include: (Assume a perpetual inventory system)

Accepted Answer

A) a debit to Accounts Payable for $1,960 and a credit to Cash for $1,960. 
B) a debit to Accounts Payable for $2,000, a debit to Merchandise Inventory for $100 and a credit to Cash for $1,960. 
C) a debit to Accounts Payable for $2,000, a credit to Merchandise Inventory for $40 and a credit to Cash for $1,960. 
D) a debit to Accounts Payable, for$1,960 a debit to Merchandise Inventory for $40 and a credit to Cash for $2,000. 
A) a debit to Accounts Payable for $1,960 and a credit to Cash for $1,960. 
B) a debit to Accounts Payable for $2,000, a debit to Merchandise Inventory for $100 and a credit to Cash for $1,960. 
C) a debit to Accounts Payable for $2,000, a credit to Merchandise Inventory for $40 and a credit to Cash for $1,960. 
D) a debit to Accounts Payable, for$1,960 a debit to Merchandise Inventory for $40 and a credit to Cash for $2,000.

Question 3

Under the periodic inventory system, purchases, purchase discounts, and purchase returns and allowances are recorded in the Merchandise Inventory account as and when they occur.

Accepted Answer

A) True 
 B)False

Question 4

In which of the financial statements do Merchandise Inventory and Cost of goods sold appear?

Accepted Answer

A) on the balance sheet and statement of owner's equity, respectively 
B) on the statement of owner's equity and income statement, respectively 
C) on the balance sheet and income statement, respectively 
D) on the income statement and statement of cash flows, respectively 
A) on the balance sheet and statement of owner's equity, respectively 
B) on the statement of owner's equity and income statement, respectively 
C) on the balance sheet and income statement, respectively 
D) on the income statement and statement of cash flows, respectively

Question 5

A sales allowance is recorded with a credit to Accounts Payable.

Accepted Answer

A) True 
 B)False

Question 6

An entity that buys goods and sells them to customers at a markup is a:

Accepted Answer

A) merchandiser. 
B) service provider. 
C) manufacturer. 
D) producer. 
A) merchandiser. 
B) service provider. 
C) manufacturer. 
D) producer.

Question 7

The following information relates to Nebula Inc.   Calculate the operating income.

Accepted Answer

A) $12,500 
B) $67,500 
C) $230,000 
D) $35,000 
A) $12,500 
B) $67,500 
C) $230,000 
D) $35,000

Question 8

The following details are provided by Blue Bell Merchandisers. The company uses the periodic inventory system.   Calculate the amount of net purchases.

Accepted Answer

A) $151,950 
B) $87,360 
C) $88,950 
D) $106,000 
A) $151,950 
B) $87,360 
C) $88,950 
D) $106,000

Question 9

The following information relates to Nebula Inc.   Calculate the net income of Nebula.

Accepted Answer

A) $12,500 
B) $22,500 
C) $67,500 
D) $230,000 
A) $12,500 
B) $22,500 
C) $67,500 
D) $230,000

Question 10

Avery Supplies uses a periodic inventory system. From the following details, calculate the cost of goods sold.

Accepted Answer

The answer of Avery Supplies uses a periodic inventory system....

Question 11

A company that uses a perpetual inventory system purchased inventory on account and later returned goods worth $200 to the vendor. The journal entry to record these returns would be:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 12

A reduction in the amount of cash received from a customer for early payment is known as a Sales Discount.

Accepted Answer

A) True 
 B)False

Question 13

The entry to close Sales Discounts will include a debit to Income Summary.

Accepted Answer

A) True 
 B)False

Question 14

A merchandiser uses a perpetual inventory system. The beginning Capital balance of a merchandiser was $100,000. During the year, sales revenue amounted to $75,000, sales returns and allowances were $1,000, sales discounts were $3,000, cost of goods sold was $40,000, and all other expenses totaled $10,000. The total withdrawals amounted to $25,000.The last step in the closing process would include:

Accepted Answer

A) a debit to Income Summary for $54,000. 
B) a credit to Income Summary for $75,000. 
C) a debit to Owner's Name, Capital for $21,000. 
D) a debit to Owner's Name, Capital for $25,000. 
A) a debit to Income Summary for $54,000. 
B) a credit to Income Summary for $75,000. 
C) a debit to Owner's Name, Capital for $21,000. 
D) a debit to Owner's Name, Capital for $25,000.

Question 15

In a periodic inventory system, the cost of goods sold account is continuously updated as and when sales occur.

Accepted Answer

A) True 
 B)False

Question 16

Refer to the following trial balance.   How much are net sales revenues?

Accepted Answer

A) $465,000 
B) $480,000 
C) $102,000 
D) $96,000 
A) $465,000 
B) $480,000 
C) $102,000 
D) $96,000

Question 17

Gross profit represents the mark-up on:

Accepted Answer

A) sales revenue. 
B) merchandise inventory. 
C) operating expenses. 
D) transportation costs 
A) sales revenue. 
B) merchandise inventory. 
C) operating expenses. 
D) transportation costs

Question 18

An adjusted trial balance of Woods Company for the year 2015 is given below. Prepare a single-step income statement for the company.

Accepted Answer

The answer of An adjusted trial balance of Woods Company...

Question 19

A company has purchased inventory and received an invoice that requires the buyer to pay the transportation costs for delivering the merchandise. The terms in this case are:

Accepted Answer

A) FOB destination. 
B) FOB shipping point. 
C) FOB, 2/10, n/30. 
D) FOB in transit. 
A) FOB destination. 
B) FOB shipping point. 
C) FOB, 2/10, n/30. 
D) FOB in transit.

Question 20

Avery Supplies uses the periodic inventory system. February 1, Avery purchased inventory on account for $10,000. The terms were 3/10, n/30. On February 2, Avery returned damaged goods worth $400 to the supplier and was granted an allowance. Give the journal entry for the payment if the invoice is paid after the discount period.

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Exam 5: Merchandising Operations

An invoice, with payment terms of 5/10, n/30, was issued on April 28, for $235. If the payment was made on May 12, the amount of payment will be:

A company purchased inventory for $2,000 from a vendor on account, FOB shipping point, with terms of 2/10, n/30. The company paid $100 cash for freight in. The entry to record payment of invoice within 10 days by the purchaser would include: (Assume a perpetual inventory system)

Under the periodic inventory system, purchases, purchase discounts, and purchase returns and allowances are recorded in the Merchandise Inventory account as and when they occur.

In which of the financial statements do Merchandise Inventory and Cost of goods sold appear?

A sales allowance is recorded with a credit to Accounts Payable.

An entity that buys goods and sells them to customers at a markup is a:

The following information relates to Nebula Inc. Calculate the operating income.

The following details are provided by Blue Bell Merchandisers. The company uses the periodic inventory system. Calculate the amount of net purchases.

The following information relates to Nebula Inc. Calculate the net income of Nebula.

Avery Supplies uses a periodic inventory system. From the following details, calculate the cost of goods sold.

A company that uses a perpetual inventory system purchased inventory on account and later returned goods worth $200 to the vendor. The journal entry to record these returns would be:

A reduction in the amount of cash received from a customer for early payment is known as a Sales Discount.

The entry to close Sales Discounts will include a debit to Income Summary.

In a periodic inventory system, the cost of goods sold account is continuously updated as and when sales occur.

Refer to the following trial balance. How much are net sales revenues?

Gross profit represents the mark-up on:

An adjusted trial balance of Woods Company for the year 2015 is given below. Prepare a single-step income statement for the company.

A company has purchased inventory and received an invoice that requires the buyer to pay the transportation costs for delivering the merchandise. The terms in this case are:

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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